Too much bad in telecom bills

Second in a three-part series.

The Labor Day recess is over. Congress is facing a huge backlog of unfinished work. Many legislative initiatives — health care, the GATT trade agreement, interstate branch banking, campaign finance reform, Superfund, new hardrock mining taxes — will die on the vine if they are not passed in the six weeks or so that remain for the 103rd Congress.

Some of these legislative initiatives deserve to die. Example: proposed communications “reforms.” Reason: They expand government’s reach into homes and businesses at a time when government should be retreating. In the words of Idaho PUC regulator Joe Miller, pending Senate legislation “will create turmoil in telecommunications markets, harm consumers . . . and not accomplish its intended purposes.”

The communications bills would do some good things: They would permit cable TV providers to get into the telephone business and telephone companies to get into the cable business. Those are good things because intensified competition would give people and businesses more choices and quality, faster and cheaper. The legislation would also increase competition into the long-distance business by letting local telephone companies offer long-distance services. Once again, more choices for people and businesses.

But this legislation deserves an inglorious death. Reason: It greatly expands government’s role in running the U.S. telecom system with more than 60 new regulations by some counts and whole new layers of legal and regulatory review that are obstacles to investment and innovation for telecommunications users and providers — unnecessary speed bumps on the information superhighway.

By relying on government to guide expansion of the infobahn, Congress and the Clinton administration are squandering America’s global advantage in computers and telecommunications. By unfounded faith in their own ability to know what is best for people and communities, they will slow investment and derail formation of industry alliances that can bring new infobahn services to all Americans, everywhere.

By passing ill-advised and punitive laws — e g., the 1992 re-regulation of the cable industry — rather than letting the market decide, Congress and an overzealous FCC will marginalize America’s telecommunications industry in its own domestic market.

Overzealous regulation has happened before, and it hurts. In the 1930s, government marginalized U.S. railroads with public policy that favored building highways. In the 1940s and 1950s, federal policy favored light water nuclear reactors, and today we are stuck with nuclear power generation facilities that are inefficient, expensive and potentially dangerous. In the 1970s, the federal government decided to commercialize old technology — e.g., oil shale retorts and other synthetic fuel technologies — rather than join industry in more appropriate research-driven initiatives to invent new technologies. This synfuels policy ended up leveling mountains and wasting vast sums of money before they threw in the towel in the 1980s.

So, let’s hope the Clinton-Gore alliance with Congress to expand government’s grip on communications technology in the 1990s will die with the 103rd Congress. That will give time for a public airing of the issues and for cooler heads and new faces in the new Congress to reconsider the directions of U.S. telecommunications policy.